Dovif , You obviously haven't done that recommended economics course , and equally you avoided some history as well. Now , I am against abolishing negative gearing , because if you borrow to engage in business , discrimination against one form of business versus another , inevitably produces misallocation of resources. The problems with negative gearing arise from association with unrealistic CGT concessions. On the history , when negative gearing was abolished by Keating , there was little evidence to suggest a problem with rents and rental supply . There were some regional changes , principally western Sydney , for which there is no real evidence that the NG changes were the cause. But , there were lots of at risk Labor seats in that area , and Keating bottled it.
Basically , the presence or absence of NG made little difference , the major damage to our housing systems arose because of Howard's CGT changes , and the major reduction in spending on public housing stock throughout the country. Now , lumpy immigration , poor planning and land rezoning laws, and a number of factors which reduce mobility , all play a role .
